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Superannuation alert 29.09.15

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

On 23 September 2015, the Treasurer, Scott Morrison, and the Minister for Finance, Mathias Cormann, confirmed in a joint press conference that the Government's Tax White Paper process will continue as planned. The Treasurer also confirmed that the response to the financial systems inquiry is proceeding, explaining that it is 'very close to completion and will be soon considered by Cabinet.'

On 24 September 2015, the ATO stated that it will be introducing enhancements to superannuation online tools in November, including an enhanced SuperMatch 2 service for super funds and their suppliers, deployment of SuperTICK version 3 in Standard Business Reporting, deployment of EmployerTICK version 2 in Standard Business Reporting, full functionality to process employers' super guarantee statements in integrated core processing and removal of the ability to create new quarterly superannuation guarantee assessments in the legacy system.

On 24 September 2015, the ATO also released an FAQ in relation to its Fund Validation Service, which is a suite of services supporting the implementation of the Superannuation Data and Payment Standard that provides a service for 'funds to meet their regulatory obligation to provide rollover and contribution information on the Fund Details Register.'

On 25 September 2015, APRA registered Superannuation Industry (Supervision) modification declaration No 1 of 2015 on the Federal Register of Legislative Instruments. The Explanatory Statement to the instrument explains that the declaration repeals and remakes Modification Declaration 26, which was due to sunset on 1 October 2015. Accordingly, the instrument maintains the extended scope of the superannuation minimum benefits exception in regulation 5.08(2) of theSuperannuation Industry (Supervision) Regulations 1994 (Cth) to allow the operation of employee retention arrangements.

On 25 September 2015, the Supreme Court of New South Wales handed down the decision of Ziogos v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1385. The plaintiff, Ms Ziogos, was a member of First State Superannuation Scheme, and accordingly also became an insured person under the TPD policies the trustee, FSS Trustee Corporation (FSS), held with the second defendant (MetLife). In March 2011, Ms Ziogos submitted a claim with FSS claiming that she suffered from TPD as a result of post-traumatic stress disorder, anxiety and depression that arose out of her time in the police force. In January 2013, MetLife advised FSS that the claim had been rejected. Following a review by MetLife's claims review committee, which also declined the claim, Ms Ziogos commenced proceedings in the Supreme Court.

In the Supreme Court, Justice Ball acknowledged that it was accepted at common law that 'an insurer, when faced with a claim by an insured, owes the insured a duty of utmost good faith' in dealing with the claim (and that this duty was also replicated in the Insurance Contracts Act 1984 (Cth)). His Honour also noted that independent of this duty, where a contractual right depends on one of the contracting parties forming an opinion, or the contracting party being satisfied about the existence or absence of a particular state of affairs, there is an implied term that the opinion be a reasonable one or that the state of satisfaction to be reached is arrived at reasonably.

Justice Ball found that MetLife had not acted unreasonably by engaging in covert surveillance of Ms Ziogos, nor in failing to investigate her claim in a timely manner or requesting submissions in relation to material without identifying the material it considered to be adverse.

However, his Honour found that MetLife had breached its duty of utmost good faith on the basis that it had made its decision on the erroneous belief that Ms Ziogos was capable of working part-time, that it was unreasonable for MetLife to conclude, based on the facts, that Ms Ziogos had the capacity to return to work at some time in the future, and that it was unreasonable for MetLife to place any weight on video surveillance (which showed Ms Ziogos undertaking activities that bore no relationship to those she would be required to undertake in employment).

Therefore, his Honour found that MetLife was in breach of the TPD policies in rejecting the claims. His Honour also found that Ms Ziogos did suffer from TPD and ordered that MetLife pay FSS $935,865 in respect of Ms Ziogos' claim.

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